New Zealand: Shattering blow to business confidence in April
The ANZ bank business outlook indicator worsened further in April, hit by lockdown measures enacted to limit the spread of coronavirus. As a consequence, a record-high net 73.1% of firms reported that they expect general business conditions to deteriorate in the year ahead, from a net 63.5% in March. The headline reading thus moved further below the net-0% threshold that separates pessimism from optimism among businesses.
April’s result reflected broad-based deteriorations. Export intentions plunged further into pessimistic terrain and hit a record low in April, while employment and investment intentions plummeted, as did profit expectations. Furthermore, capacity utilization slumped.
Meanwhile, firms’ outlooks regarding their own activity—a metric which has a stronger correlation to GDP growth—collapsed to a net minus 61.2% in April, from March’s net minus 26.7% and recording the worst result on record.
Commenting on the release, Sharon Zollner, ANZ chief economist, stated:
“Firms are reeling from the abruptness and ferocity of the storm that has enveloped them, and with uncertainty extreme, planning a way out is very difficult. The quick-fire fiscal and monetary response will have helped, but times just don’t get much tougher than this”.